Germany’s most important market index lost 1.4 percent in the first few minutes of trading, though it had recovered slightly by midday. The last time the DAX dropped below the psychologically important 6,000-point mark was January 9.

“As well as the worries about the eurozone – especially Spain and its troubled banking sector – we now have increasing worries about the global economic situation,” said trader Markus Huber of ETX Capital. The weak employment stats released in the US last Friday have also exacerbated the situation, as has slower growth in China’s service industry.

The German government moved quickly to reassure the markets, saying the DAX drop did not represent an escalation Europe’s debt crisis.

Finance Ministry spokesman Martin Kotthaus said on Monday that the euro and the markets had continually risen and fallen since the crisis began in 2008. “Now we just have to wait and see what happens in the next days and weeks,” he added.

The European index EuroStoxx 50 recovered from the initial blow, and ended up gaining half a percent by midday.

The Local/DPA/bk